Global stocks hit a fresh peak for a third straight session on Wednesday as worries about a credit squeeze continued to recede, while the dollar pared recent gains as investors awaited upcoming major U.S. economic data.
Caution ahead of U.S. non-manufacturing numbers and retail sales in Europe due later in the day were seen keeping a lid on European markets, with financial bookmakers picking near flat openings for indexes in London, Paris and Frankfurt.
Both gold and U.S. crude steadied from sharp declines, while government bonds were little changed, underpinned by expectations of more U.S. interest rate cuts to help the dire housing market.
By 0620 GMT, MSCI's measure of Asia Pacific stocks excluding Japan had climbed 0.9 percent, while Tokyo's Nikkei also gained 0.9 percent to its best close since July 31.
MSCI's All-Country World index advanced more than 0.2 percent to a new peak and is now up nearly 14 percent this year.
The credit issues have subsided and that has helped push the market higher, but my concern is maybe we're still not quite out of the woods yet, said Greg Goodsell, equity strategist at ABN AMRO in Australia.
The rate of rise (in the market) would suggest a plateauing or some kind of pull back.
Since plumbing a five-month trough of 402.72 on August 17, the Asia-Pacific index has soared about 38 percent as credit fears diminished following interest rate cuts by the U.S. Federal Reserve.
FINANCIALS UP, TOYOTA DOWN
Investors betting that the worst of the credit problems may be over bought shares of banks such as Australia's Macquarie Bank, HSBC Holdings and brokers including Nomura Holdings. The MSCI index of financial stocks in the Asia Pacific region rose more than 2 percent.
Japanese brokerage Nikko Cordial surged 13.7 percent after Citigroup said on Tuesday it would buy the rest of the firm it did not already own for $4.6 billion.
But Toyota Motor ended flat, underperforming the wider market, after the car maker posted a 1 percent fall in U.S. sales in September, its third monthly decline in a row.
Energy shares such as Australian oil and gas producer Woodside Petroleum also struggled after the recent fall in U.S. crude. Oil, which settled at $80.05 on Tuesday, was steadier at $80.28 a barrel.
Among major regional markets, Hong Kong's Hang Seng Index, Australia's S&P/ASX 200 index and Singapore's Straits Times Index all set fresh life highs. South Korean financial markets were shut for a public holiday.
DOLLAR OFF HIGHS
The embattled dollar slipped after two sessions of gains but held above a record low against a basket of currencies reached recently.
Investors were wary about pushing down the dollar amid expectations that euro zone finance officials were looking to a Group of Seven meeting later this month to express support for a strong dollar and provide some relief to the euro zone.
The European currency has risen 10 percent against both the dollar and yen in the past year.
The dollar index, a gauge of the greenback's value against a basket of six major currencies, slipped about 0.1 percent to 78.243, but held above an intraday lifetime low of 77.657 set on Monday.
Many people believe that the dollar's mid- to long-term downtrend is still intact and that it's only in a temporary stage of recovery, said a senior trader at a Japanese bank.
U.S. jobs data on Friday is also in the spotlight after payrolls shrank for the first time in 4 years in August.
The euro rose to $1.4169 and popped above 164 yen, while the dollar traded at 115.79 yen, little changed from late New York levels.
The Australian dollar edged above 89 U.S. cents after strong retail sales data reinforced expectations that the Reserve Bank of Australia will keep its monetary tightening bias.
Earlier, the RBA kept its official cash rate unchanged at 6.5 percent after its policy-setting meeting in a widely expected move.
Japanese government bonds ended little changed with the yield on the benchmark 10-year bond settling up half a basis point at 1.690 percent.